Opportunity

Early days yet but I'm wondering if some of these new offerings are going to succeed given this week's falls across the board. With the big drops in equities I had expected quality bonds to stay strong or even gain traction - after all, that cash being generated by all those sales has to go somewhere and I thought that fixed income might benefit.

But that doesn't seem to be happening and there are a number of established big names, particularly in the Prefs and Pibs that are now generating yields in excess of 6%.

Yes, we had that scare a while ago when "irredemables" could apparently be cancelled at par but some issuers reassured with confirmation that they had no intention of doing any such thing.

Personally, I've added a few more NatWest 9% Prefs with a yield of 6.2% and Ecclesiastical 8.625% with a yiled of 6%

I can see interest rates creeping up but not by all that much.

Am I mad, deluded or just stupid? Or maybe just jumping the gun?

Be interested in hearing what others here think about the current situation and where things might go from here.





Comments

  • I suspect "End user" investors are coming out of certain funds, in particular equities etc, this in turn forces the fund managers to sell the primary holdings, which may include Prefs & other fixed asset securities. It may take a while before the "end user" investors decide what to do with their cash investment holdings! You are not mad, but holding off until the "storms are in full swing" might provide a better investment opportunity. Patience is a virtue! (don't invest on a falling knife). Good opportunities await
  • The rush to safety and the herd instinct is certainly upon us but what is safety when there are so many unknowns. For me a 10-11% fall in the FTSE from the top is not a disaster when some of the valuations and expectations were too high anyway and as an example Fevertree and Ocado.
    I'm a bit like shaunm in believing that some good chances await and there will be some undeserved casualties in the stampede to the exit and allow value buying but maybe in a stepped manner. The returns that Laughton outline above are looking like low hanging fruit and i see BBYB is also lower with yield of maybe 5.4%.
  • Some Fixed Assets Securities have taken a bigger fall today than others eg
    NWBD -1.71% (as per LSE)
    LLPC -1.04%
    ELLA - 1.02%
    BUR1 - 1.06%
    BOI - 1.20%
    I keep a dummy portfolio of securities on the LSE site which I monitor, some of which I don't hold, including the equity side of the business eg BUR for Burford
    Overall portfolio loss today = -0.52%, which is better than FT100 -1.94%
    Some holdings in infrastructure/Environment funds (22%), remainder Fixed Income

    I suspect some of the ones indicated above will be picked by the professional institutions looking for bargains.
    Sussexmade, as you suggest a "stepped manner" of investing spare cash would be in order
    Likewise, the disposal of securities that are getting closer to maturity may be a good idea (low yields), on the assumption that their prices have not fallen as much, eg PHP1 & SMP1

    "For me a 10-11% fall in the FTSE from the top is not a disaster"
    I agree, this likely to equate to 2.5% for my own portfolio, (less than current unrealised gains of 2.7%). No general concern, apart from the fear of a very left-wing Labour government
  • Agree with all the above. I think it's a case of sitting tight but being in a position to act quickly. I've kept back a fair percentage of my isa allowance to drip buy more fixed assets., after a no buying Summer. Patience and timing are key but what else is there out there
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